Regulation

U.S. derivatives rules still near starting gate

21 Apr 2010

Reform has momentum and the Senate Agriculture Committee has now upped the ante with some aggressive proposals. But the devil will be in the details, and even the broad strokes are still contentious. Breakingviews provides a guide to the key issues at stake.

Why regulators should allow banks to burn

20 Apr 2010

Financial institutions are looking to airlines, drug companies and even fishermen for risk management tips. But most nonfinancial industries try to minimise risk. Banks seek it out. The U.S. Forest Service, which uses small fires to prevent infernos, may offer the best lessons.

IMF’s FAT bank tax will set cat among pigeons

20 Apr 2010

It s suggesting an expected levy on liabilities and sensible tax changes to deter leverage. But the IMF s surprise proposal is to tax banks prebonus profits. The FAT tax, probably no accidental acronym, would be far from ideal but maybe the industry has brought it on itself.

If bank levy is the answer, what’s the question?

19 Apr 2010

While the U.S. is going ahead with its plans, the EU is still debating how one would work. Member countries don't agree on how big the tax should be, and what to do with the money. This isn't necessarily bad, if careful thinking allows them to coordinate their efforts.

Goldman’s CDO investors: fools or victims?

19 Apr 2010

That s the distinction on which the SEC s charges hinge: Were IKB and others lax about researching their investments, or did Goldman hide crucial information? The protagonists stories so far have important differences.

U.S. financial reform is still a matter of faith

19 Apr 2010

The SEC's suit against Goldman may sway some doubters. But ending government bailouts of banks relies heavily on Wall Street believing rules will be enforced and failures will be allowed. For skeptics, though, the current Senate bill leaves enough wiggle room to induce doubt.

Europeans won’t be amused by alleged Goldman scam

16 Apr 2010

ABN Amro, and ultimately RBS, lost $841 mln in the allegedly fraudulent CDO investment concocted by Goldman. Bust German lender IKB lost $150 mln. These European banks may be mugs. But the Dutch, UK and German states, which bailed them out, will be livid if the case is proved.

SEC finally lights fire under Goldman smoke

16 Apr 2010

The U.S. regulator is going allin, charging the popular totem of Wall Street greed with CDO fraud while dragging in the most famous beneficiary of the mortgage meltdown, the hedge fund Paulson & Co. Goldman's shares swooned 15 pct. Its reputation, and the SEC's, are on the line.

SEC tries to ride Goldman back to credibility

16 Apr 2010

It will take more than one highprofile lawsuit to restore the reputation of America's top financial cop. L'affaire Madoff was close to a brand killer. But the charges against Goldman are powerful evidence and a warning that the oncesleepy agency is awake and on the prowl.

IMF faces whole new kettle of fish in Greece

12 Apr 2010

The IMF is back at the peak of its power. But with Greece it has taken on a novel challenge repairing the government's finances with neither a default nor currency devaluation. No bailout in modern history has managed this. It won't be easy to make Greece the first.

Political meddling in UK M&A diddles investors

12 Apr 2010

The ruling Labour party has proposed a raft of irrelevant or unjustifiable obstacles to UK takeovers if it wins the election. The emotional purchase of Cadbury has made protecting companies an unlikely campaign issue. But shareholders' rights are being forgotten.

U.S. bank fix impeded by false dual mandate

8 Apr 2010

Most bank regulators are supposed to focus on their charges' soundness. But they face political pressure to adopt a second mandate, namely promoting lending in the hope of boosting employment. Trouble is, one calls for banks to hold more capital against assets, one for less.

Greenspan points out regulators’ fallibility

8 Apr 2010

The former Fed chairman admitted to being wrong about 30 percent of the time when he led the U.S. central bank. That's not just retrospective modesty. Regulators are only human. When they are expected to identify and prick bubbles, their limitations will become even more obvious.

NY Fed chief holsters up for bubble-busting

7 Apr 2010

While he is appropriately wary of triggerhappy policymakers doing harm, Bill Dudley has finally shifted the debate beyond whether the Fed should fight bubbles. He has laid out how he thinks it might actually be done. It s the right kind of discussion to have.

Internet inches away from utility status

6 Apr 2010

A landmark court ruling means broadband operators won t need to treat all traffic on their networks equally. The blow to net neutrality gives the Internet a longer leash than its telco or electricity cousins. But it could spur an even more ambitious Washington power grab.

JPMorgan’s WaMu tax grab less greedy than it seems

29 Mar 2010

Going after $1.4 bln in rebates might look a bit rich for a bank that snapped up its defunct rival for a song in 2008. But the deal would help taxpayers too, by capping FDIC s potential liability from the WaMu sale. If lawyers can agree, it s a swap that sounds reasonable.

Insider-dealing probe should win reprieve for FSA

29 Mar 2010

The UK regulator is finally making progress in cracking down on market abuse. But it will be broken up if the opposition Conservative party wins the election. Though there is a case for rethinking supervision of banks, the Tories should leave the FSA's enforcement division alone.

Open skies dream not yet shattered

26 Mar 2010

European airlines wanted to get more out of the latest draft EU agreement with the U.S. than a few almost token improvements. But considering the domestic American political situation, the deal plus a commitment to keep on pushing forward is not a bad outcome.

U.S. financial reform process takes risky turn

23 Mar 2010

The effort to reform the U.S. financial regulatory system was supposed to show the Senate working more or less as intended bipartisan up to a point, and largely nonconfrontational. But it s starting to follow the healthcare bill s more contentious path.

U.S. pay czar should make more use of bully pulpit

23 Mar 2010

Ken Feinberg s pay limits for the five firms all but one being car companies he oversees are a sideshow. Instead he ought to name and shame companies like American Express that seem to ignore his sound compensation principles. That could be Feinberg s most important function.